$26B Mortgage Settlement a 'Modest' Help: Experts

A foreclosed home stands boarded up on February 9, 2012 in Islip, New York. (Getty Images)

(Newser)
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The $26 billion mortgage settlement announced yesterday will be a boon for some—but the terms of the deal leave many homeowners out in the cold. Recipients of loans owned by the Federal Housing Administration, for instance, won't directly benefit from the settlement; nor will those with mortgages held by private investors, the New York Times reports. Millions of Fannie Mae and Freddie Mac loans—about half of America's mortgages—aren't part of the plan, either.

Economists have mixed expectations regarding the settlement's effects. In the long term, it should help the housing market recover, Bloomberg notes, though economists tell the Times they don't expect this to be a huge win for the economy because banks have three years to dole out the money. And in the immediate future, things could get harder for struggling homeowners. Foreclosures slowed as banks and officials negotiated the deal; now that it's done, we may see another rash of home seizures. "It is frankly a headline victory for both banks and attorneys general with a modest impact on the housing market," an analyst tells the Wall Street Journal. (Read more mortgage stories.)

This settlement is a political advertisement for Obama's reelection campaign. $26 Billion down the drain.

aspergers-guy

Feb 10, 2012 6:58 PM CST

This 'settlement' is a joke, right? (read http://bit.ly/x60pGW and see). I mean, the stats I hear are 200K homes foreclosing a month today (so 2.4 million homes annually across the country right now) and estimates that rate will continue for the next 4-5 years. $26B is a drop in the bucket in the ocean of foreclosures now & the deluge coming. Worse yet, the banks aren't actually paying out much in cash for the meltdown, like $4 or $5 billion out of pocket, most of that "$26 billion settlement" will be just in future principal reductions for underwater homeowners. This is crazy. This kind of settlement amounts to putting a band-aid over a severed limb, no tourniquet, just a band-aid. At some point the mortgage market is just going to bleed off & die with a settlement like this. Amazing.

getoffmylawn

Feb 10, 2012 5:22 PM CST

Another scam, where the banks get off scot free and noone is held accountable for the greed-induced debacle we have gone thru. This money will go into a gov't run sink-hole that will benefit noone but people connected to the bureaucracy it creates. Lawyers, banks and administrators will suck up every dime of this money, and home-owners will get the crumbs. Meanwhile, the banks will write off the expense and keep screwing the mortgage holders every chance they get. And NOONE goes to jail.